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Eastern American Natural Gas Trust Depos Reports Operating Results (10-Q)

May 08, 2009 | About:
10qk

Eastern American Natural Gas Trust Depos (NGT) filed Quarterly Report for the period ended 2009-03-31.

Eastern American Natural Gas Trust was formed to acquire and hold net profits interests created from the working interests owned by Eastern American in 650 producing gas wells and 65 proved development well locations located in West Virginia and Pennsylvania. Eastern American Natural Gas Trust Depos has a market cap of $150.4 million; its shares were traded at around $25.5 with and P/S ratio of 8.8. The dividend yield of Eastern American Natural Gas Trust Depos stocks is 8%. Eastern American Natural Gas Trust Depos had an annual average earning growth of 5.9% over the past 10 years. GuruFocus rated Eastern American Natural Gas Trust Depos the business predictability rank of 2.5-star.

Highlight of Business Operations:

The "Operating Cost Charge" for 2009 is based on an annual rate of $648,448, and 2008 was based on an annual rate of $617,564. As provided in the Conveyances, the Operating Cost Charge will fluctuate based on the lesser of (A) five percent (5%) or (B) a percentage, not less than zero percent (0%), equal to the percentage increase, if any, in the average weekly earnings of Crude Petroleum and Gas Production Workers for the last calendar year, as shown by the index of average weekly earnings of Crude Petroleum and Gas Production Workers, as published by the United States Department of Labor, Bureau of Labor Statistics, based on a December-to-December comparison.

The Trust did not have any contractual obligations as of March 31, 2009. At March 31, 2009, the Trust had Trust General and Administrative Expenses Payable of $149,576 and Distributions Payable of $1,954,140.

The Trust's Distributable Income was $1,954,140 for the three months ended March 31, 2009 as compared to $2,772,843 for the three months ended March 31, 2008. This decrease was due to a decrease in Royalty Income for the three months ended March 31, 2009 to $2,665,596 as compared to the three months ended March 31, 2008 of $3,547,891. The decrease in Royalty Income was related to a decrease in the price payable to the Trust under the Gas Purchase Contract as discussed below ($6.766 per Mcf for the three months ended March 31, 2009 as compared to $8.690 per Mcf for the three months ended March 31, 2008). This decrease was also related to a decrease in production of gas attributable to the Net Profits Interests for the three months ended March 31, 2009 (395 MMcf) as compared to the three months ended March 31, 2008 (408 MMcf). The decline in production is primarily attributable to natural production declines. Taxes on Production and Property were $201,002 for the three months ended March 31, 2009 as compared to $262,122 for the three months ended March 31, 2008. The decrease in taxes is due directly to the decrease in Royalty Income as discussed above. General and Administrative Expenses were $348,342 for the three months ended March 31, 2009 as compared to $358,535 for the three months ended March 31, 2008. The decrease in General and Administrative Expenses was due primarily to a decrease in professional fees.

The price payable to the Trust for gas production attributable to the Net Profits Interests was $6.766 per Mcf for the three months ended March 31, 2009 and $8.690 per Mcf for the three months ended March 31, 2008. The price per Mcf was lower for the three months ended March 31, 2009 than for the corresponding three month period ended March 31, 2008 due to a decrease in the average spot market price for gas delivered at the Henry Hub near Henry, Louisiana ($5.851 per Dth for the three months ended March 31, 2009 as compared to $7.600 per Dth for the three months ended March 31, 2008).

For the calendar quarter ended March 31, 2009, the high and low closing prices of the Treasury Obligations (which have $1,000 face principal amount), as quoted in the over-the-counter market for United States Treasury obligations were $939.50 and $914.60, respectively. On March 31, 2009, the closing price of the Treasury Obligations, as quoted on such market, was $934.10.

The Trust does not engage in any operations, and does not utilize market risk sensitive instruments, either for trading purposes or for other than trading purposes. As described elsewhere herein, the Depositary Units consist of beneficial ownership of one unit of beneficial interest in the Trust and a $20 face amount beneficial ownership interest in a $1,000 face amount zero coupon Treasury Obligation maturing on May 15, 2013. High and low price information for the Treasury Obligations is included under Item 2. As described elsewhere herein, gas production attributable to the Net Profits Interests is sold to a wholly owned subsidiary of Eastern American pursuant to the Gas Purchase Contract described herein, and the Trust's quarterly distributions are highly dependent on the price payable to the Trust for gas production attributable to the Net Profits Interests. Natural gas prices can fluctuate widely in response to many factors, all of which are out of the control of the Trust, the Trustee and Eastern American.

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Rating: 1.7/5 (3 votes)

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